Less than a week after we wrote about the European Commission's proposals to deal with late payments, the UK government has now announced the measures in its upcoming Prompt Payment & Cash Flow Review. It says that this aims to improve delivery and enforcement of policies, enabling more small businesses to get paid on time.

Late payment of invoices and long payment terms are key issues that businesses, especially SMEs, highlight as a barrier to their growth. The government says that owners and managers are forced to spend disproportionate time chasing payments. The resulting cash flow problems cause even viable organisations to struggle.

The measures in the review include:

• extending the Reporting on Payment Practices and Performance Regulations 2017. Following consultation, the government will take forward legislation to extend payment performance reporting obligations. It will include new metrics for reporting, including a value metric, so businesses and commentators can see the value of invoices, including invoices paid late, and a disputed invoices metric. It also intends to introduce reporting on retention payments for businesses in the construction sector.
• providing greater advice to small businesses on negotiating payment terms that better suit them. The government also says that having a digital payments process can help SMEs to be paid more quickly, as well as helping them to manage their cash flow.
• broadening the powers of the Small Business Commissioner: introducing broader responsibilities, enabling the Commissioner to undertake investigations and publish reports where necessary on the basis of anonymous information and intelligence. This will require primary legislation, so will be subject to the legislative timetable.

The measures do not appear to go as far as the European Commission's proposals but may help to foster a culture where late payment is seen as unacceptable, especially as the government would like to tie prompt payment into organisations' ESG activities. In addition, it is possible that further measures could also be included as the legislation passes through the parliamentary process and amendments are made by MPs and the Lords.

With these developments in mind, do get in touch with your usual Lewis Silkin contact if you need assistance devising and drafting your payment terms and procedures.